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Can Congress teach us a thing or two about budgeting?

| September 23, 2016
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Can Congress teach us a thing or two about budgeting? That sounds like an Oxymoron. But believe it or not, the answer maybe yes.
A few years ago, Congress and the President reinstated a rule called PAYGO which stands for pay-as-you-go.  Which has been broken by them several times.
Here’s how the rule works. PAYGO was designed to encourage Congress to offset the cost of any legislation that increases spending on entitlement programs or reduces revenues so it doesn’t expand the deficit. Under PAYGO, Congress must pay for such legislation by reducing other entitlement spending or increasing other revenues. Congress and the President first established PAYGO in 1990. 

Makes sense:  Without paying-as-you-go you will surely wind up deep in debt, which is exactly how we find our country.

So how can you apply PAYGO to your own finances?  Apply the same rule. Agree not to add to your recurring monthly expenses without also agreeing to cut something else out of your budget to offset this expense.
The government can increase income by raising taxes.  Fortunately, we don’t have the ability to levy a tax on others and collect their money, so we have to raise the funds ourselves through work.  If you receive a raise at work, you may want to allocate a small percentage of your new income to adding something to your household that would add value.  
There is a risk here of lifestyle inflation – inflating your lifestyle to meet or exceed your new income.  Tread carefully.
By implementing a Pay-As-You-Go system in your finances, you will not only avoid debt, but you will be able to take pride in the things you do own because you will really own them; they don’t own you.
Another way to outdo the government – have surpluses. Listen to my full podcast here and below.

If you’d like help reviewing your investment strategies and saving for retirement, please contact Casey Boland via email [email protected] or 513-598-5120.

Date Posted: 09/23/2016 Advice provided in this article is meant for educational purposes only and financial education is important to us. Before making decisions regarding your personal financial situation, please consult an advisor or conduct your own due diligence. If you would like to discuss your Retirement Income Plan with an HCM Wealth Advisor, please give us a call – 513-598-5120. Located in Cincinnati, Ohio, we serve clients in 28 states, and we’d love to help.

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